Jackson County pastor used money from his church in his MO Senate race. Is that legal?

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A Jackson County pastor is using money from his church to help fund his Republican campaign for Missouri Senate — an unusual arrangement questioned by experts who spoke to The Star.

Joe Nicola’s church in Independence has given $3,150 to a political action committee called Truth and Light supporting his candidacy. The PAC in turn has contributed to Nicola’s campaign committee at least three times, including twice since 2023.

Federal law bans churches and other charities from engaging in political activity, including donations and endorsements for or against candidates, in exchange for being exempt from paying federal taxes. However, Nicola said in an interview that his church, New Covenant Ministries, was not subject to those rules because it was not registered with the Internal Revenue Service as a 501(c)(3) charitable organization.

“I teach my congregation to be an active part of society and politics is part of that,” said Nicola who is from Grain Valley. “There’s no such thing as separation of church and state. That’s a misnomer…The 501(c)(3) is just government regulations.”

In exchange for nonprofit tax exemption, labeled 501(c)(3) status, organizations have to meet certain strict requirements such as a ban on providing earnings to shareholders or limiting political involvement, showing that their money only goes to their charitable mission.

Nicola defended the donations, saying that his church could contribute to the PAC because it was not held to the IRS requirements for 501(c)(3) organizations.

Legal and campaign finance experts who spoke with The Star said the donations, and Nicola’s argument, could raise some potential legal and ethical issues. In addition to the legal questions, the church’s role in donating to Nicola’s PAC appears to be unheard of in Missouri politics.

“There’s a reason you’ve never read about or heard stories about, you know, churches’ entanglement in partisan politics. It’s because most churches understand that the law prohibits them from being engaged in partisan political activity,” said Chuck Hatfield, a Jefferson City-based attorney who previously worked in the state Attorney General’s Office.

“Apparently, this one doesn’t agree, you know, and if they’re wrong, they could face some pretty serious financial penalties.”

Under the IRS requirements, churches can advocate for certain issues. However, the rules expressly prohibit political activity in favor or against specific candidates.

Revelations about the donations come as Nicola is running in the Republican primary for District 11 in the Missouri Senate against Rep. Aaron McMullen from Independence and David Martin, a truck driver from eastern Jackson County. The district, which covers eastern Kansas City, Independence and Sugar Creek, was previously held by Senate Minority Leader John Rizzo, an Independence Democrat.

“I’ve never in my 25 years in conservative politics seen a candidate who was funding his or her political campaign directly from their church,” said Gregg Keller, a political consultant aligned with a PAC supporting McMullen. “This stinks. This stinks to high hell.”

Is the church a nonprofit?

Nicola is the founding pastor and president of New Covenant Ministries in Independence, a non-denominational organization that describes itself as an Ekklesia (the Greek translation for gathering) instead of a church. It posts its “Sunday Messages” online, but they’re password-protected.

“Our Bible translations tell us that Jesus will build His church. But, that is not what He actually said,” the organization’s website says. “We have been living under a false identity as ‘church’ for 1700 years! Jesus said He would build His Ekklesia (k’nusta) not church. New Covenant Ministries is an Ekklesia, not a church. There are similarities as well as major differences.”

Nicola, however, said he did not take issue with the word church and still uses it.

The church did not immediately return a call to its main number listed online. It’s unclear how many people typically attend its Sunday assemblies.

The church has been registered as a nonprofit corporation with the state of Missouri since 1999, state records show. Entities such as churches, homeowner associations and private schools can apply to be nonprofits with the state and are typically exempt from state and local taxes.

A spokesperson for Jackson County confirmed that Nicola’s church has a religious exemption and is not paying taxes to the county. Missouri state law allows for tax exemptions for property “used exclusively for religious worship.”

However, Nicola said that the church has never filed to be exempt from federal taxes with the IRS. The Star was unable to find any forms that indicate New Covenant Ministries has filed documentation with the IRS.

“The 501(c)(3) you would have to follow IRS guidelines, you’d have to follow the government, open up your, you know, books to them, they limit what you can say,” he said. “I’m not going to do that. I’m going to exercise my First Amendment right.”

He said that churches like his shouldn’t have to pay taxes because of “all the good that we do in the community.” However, Nicola said not registering with the IRS has created some limits for his church.

“A lot of corporations won’t give to the church for any project you’re doing because…they’ll only give to a 501(c)(3) and that’s fine, because my attitude’s always been if God’s called you to do something, then he’s going to supply it — all the needs that’s needed,” he said.

Representatives from the IRS and the Missouri Department of Revenue did not immediately respond to questions for this story.

Is the church really a church?

Campaign finance records show that Nicola’s church has donated to the PAC supporting him on seven occasions since March 2023. All of the contributions were in $450 increments and total $3,150.

The PAC has made two contributions to Nicola’s campaign since December 2023, totaling $2,400.

The church’s federal tax-exempt status could be crucial to determining whether Nicola’s argument is correct. According to the IRS, churches that meet the definition of a charitable organization are automatically tax-exempt even if they don’t register.

Nicola did not respond to a follow-up call and text to confirm that his church was not exempt from paying federal taxes.

Jon Whitehead, a Kansas City attorney who has been involved in a slew of cases involving religious organizations, said in a statement that the donations presented a “red light” situation for churches.

“Sunday sermons often touch on political and moral themes,” he said. “But it’s extraordinarily risky to give offering plate money directly to a political action committee.”

Whitehead said the IRS has decided in similar situations that a church operating for personal or political reasons was never a church at all.

“So the big risk is not just that the ‘church’ won’t be a 501(c)(3), but that the church won’t even be a church or charity at all. But this (group) has already claimed ‘church’ tax exemptions,” he said, referring to the fact that the church is exempt from Jackson County property taxes. “If more than an insubstantial part goes to political candidates, the IRS has said that’s no church at all.”

He added that if donors took tax deductions on charitable gifts that went to a candidate, “all of the donors may face IRS scrutiny.”

Whitehead acknowledged that the IRS and the state Attorney General’s Office are typically reluctant to interfere with religious activity as protected by the First Amendment. However, he said that they have tools to investigate if they have reason to believe the church name is being used to evade taxes or campaign finance laws.

“The burden would be on the church to show that it functions exclusively as a church or charity,” he said. “These facts raise questions that will be hard to explain.”

Julie Allen, a former executive director of the Missouri Ethics Commission, said in a statement that churches, whether a 501(c)(3) or nonprofit, “who contribute in a way that supports or opposes a candidate raises not only ethical questions but also questions about their IRS tax exempt status and compliance with Missouri’s campaign finance laws.”

Inside the race

The revelations about the church donations come just before the Aug. 6 primary election in which Nicola has significantly trailed one of his opponents in fundraising.

Nicola’s campaign committee has raised roughly $81,400 this election cycle while the political action committee supporting his candidacy has raised $31,400.

McMullen’s campaign committee has raised roughly $179,000 this election cycle, and the PAC supporting him has raised $392,400. Martin’s campaign committee, on the other hand, has raised just about $10,670.

The large amount of spending comes as Republicans are looking to flip the Jackson County district previously held by Rizzo, a well-respected Democrat who left the Senate before his term expired to head the Jackson County Sports Complex Authority.

Whoever wins in the Republican primary will face Democratic Rep. Robert Sauls from Independence in the general election.

Nicola, in an interview, described himself as the only “grassroots candidate,” in the race and attacked McMullen for the large amount of money he’s received in the race, saying it was from “lobbyists and special interests.”

“We have a lot of solid roots here,” he said. “So I think the character, the integrity and the experience — because I’m not being funded by lobbyists and special interests, that’s part of the problem in Jefferson City.”